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If you are a marijuana business, regardless of whether you are operating within state law, you have major tax and banking headaches. Banking and most tax laws are governed by Federal law, which deems these activities illegal. One challenge commonly faced by marijuana businesses is the lack of access to the banking system, because banks don't want to deal with businesses illegal under federal law.

Without banks, dispensaries pay the government in cash, but face a penalty for the cash payments. This situation highlights the hypocrisy of the government's tax and drug policies, requiring payment on the one hand, punishing you for paying on the other. A recent case filed in U.S. Tax Court by a Colorado dispensary, Allgreens LLC, is the most recent challenge to this Catch-22 created by the government. Unfortunately, the IRS is probably going to win because it is just following the letter of the law here - a change to the tax or the drug laws is necessary for a fix.

If you are a marijuana business, regardless of whether you are operating within state law, you have major tax and banking headaches. Banking and most tax laws are governed by Federal law, which deems these activities illegal. One challenge commonly faced by marijuana businesses is the lack of access to the banking system, because banks don't want to deal with businesses illegal under federal law.

Without banks, dispensaries pay the government in cash, but face a penalty for the cash payments. This situation highlights the hypocrisy of the government's tax and drug policies, requiring payment on the one hand, punishing you for paying on the other. A recent case filed in U.S. Tax Court by a Colorado dispensary, Allgreens LLC, is the most recent challenge to this Catch-22 created by the government. Unfortunately, the IRS is probably going to win because it is just following the letter of the law here - a change to the tax or the drug laws is necessary for a fix.

The Wilson Tax Law Group is a tax firm serving the Newport Beach and Yorba Linda areas. This blog is meant to be both a service to our clients, where we can post IRS, California Franchise Tax Board, FBAR, and Orange County property tax news that may be of interest to them. It will also be a place where we will post on topics that are of interest to us and other tax professionals following hot tax topics of the moment. Sometimes, those areas will intersect, because we handle cutting edge cases including tax audits and tax planning for marijuana dispensaries (sales tax and income tax) and defending taxpayers in criminal investigations of the FBAR penalties. This blog will be constantly evolving, so please give us feedback in the comments section if you think of future topics you would like to read more about.

The Wilson Tax Law Group is a tax firm serving the Newport Beach and Yorba Linda areas. This blog is meant to be both a service to our clients, where we can post IRS, California Franchise Tax Board, FBAR, and Orange County property tax news that may be of interest to them. It will also be a place where we will post on topics that are of interest to us and other tax professionals following hot tax topics of the moment. Sometimes, those areas will intersect, because we handle cutting edge cases including tax audits and tax planning for marijuana dispensaries (sales tax and income tax) and defending taxpayers in criminal investigations of the FBAR penalties. This blog will be constantly evolving, so please give us feedback in the comments section if you think of future topics you would like to read more about.